PHTM COVID-19 FINANCE UPDATE CORONAVIRUS JOB RETENTION SCHEME
IMPACT OF THE SCHEME SO FAR:
As of midnight on 24 May 2020, the scheme had been used by 1 million employers, to protect around 8.4 million jobs and the total value of claims made was £15 billion.
FLEXIBLE FURLOUGHING:
• From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked.
• From 1 July, employers will be able to agree any working ar- rangements with previously furloughed employees.
• When claiming the CJRS grant for furloughed hours; employers will need to report and claim for a minimum period of a week.
• This is a minimum period and those making claims for longer periods such as those on monthly or two weekly cycles will be able to do so.
• To be eligible for the grant, employers must agree with their em- ployee any new flexible furloughing arrangement and confirm that agreement in writing.
• Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period. Further details will be included in future guid- ance.
• Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
• For worked hours, employees will be paid by their employer subject to their employment contract and employers will be re- sponsible for paying the tax and NICs due on those amounts
CLOSURE TO NEW ENTRANTS FROM JULY:
• The scheme closed to new entrants on 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June.
• Employers will have until 31 July to make any claims in respect of the period to 30 June.
• From 1 July the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed.
• From 1 July, claim periods will no longer be able to overlap months, employers who previously submitted claims with peri- ods that overlapped calendar months will no longer be able to do this going forward. This is necessary to reflect the forthcom- ing changes to the scheme.
• The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the current CJRS.
• Employers can continue to make claims in anticipation of an im- minent payroll run, at the point payroll is run or after payroll has been run.
• Employers will be able to make their first claim under the new scheme from 1 July.
16
Govt. contribution: Employer NICs and pension contributions
Govt. contribution: Wages
Employer contribution: Employer NICs and pension contributions2
Employer contribution: Wages
Employee receives Yes
80% up to £2,500
No –
80% up to £2,500
per month No
80% up to £2,500
Yes –
80% up to £2,500
per month No
70% up to £2,187.50
Yes
10% up to £312.50
80% up to £2,500
per month No
60% up to £1,875
Yes
20% up to £625
80% up to £2,500
per month
NB: Government contribution covers employer NICs and pension contributions (up to an amount equivalent to the minimum auto- matic enrolment employer pension contribution) calculated on 80% of wages up to £2,500 a month.
JULY 2020 EMPLOYER COSTS:
From August 2020, the level of the grant will be slowly tapered to reflect that people will be returning to work:
• In July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee doesn’t work. Employers will have to pay employees for the hours they work.
• In August, the government will pay 80% of wages up to a cap of £2,500 and employers will pay ER NICs and pension contribu- tions for the hours the employee does not work.
• In September, the government will pay 70% of wages up to a cap of £2.187.50 for the hours the employee does not work. Em- ployers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
• In October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.
• The cap will be proportional to the hours not worked.
• As with the previous scheme, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
Table: Government contribution, required employer contribution and amount employee receives where the employee is furloughed 100% of the time.
July August September October
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